Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

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In an auditor's report for financial statements prepared in conformity with OCBOA, which item must be included?

  1. A sentence stating that the auditor is responsible for the financial statements.

  2. A title that includes the word "independent."

  3. The signature of the company controller.

  4. A paragraph stating that the audit was conducted in accordance with OCBOA.

The correct answer is: A title that includes the word "independent."

In an auditor’s report for financial statements prepared under Other Comprehensive Basis of Accounting (OCBOA), one essential requirement is that the report must include a title that features the word "independent." This title establishes the auditor’s relationship with the financial statements and is a critical component of the report because it signifies the auditor's objectivity and independence from the entity being audited. It assures users of the financial statements that the audits have been conducted impartially, which is fundamental for maintaining trust in the financial reporting process. Including the word "independent" in the title is not merely a formality; it has significant implications for the perceived credibility of the audit. An independent auditor is presumed to have conducted the audit without any conflicts of interest, thus enhancing the reliability of the auditor’s findings and conclusions for users of the financial statements. Other items mentioned, such as a sentence about the auditor’s responsibility for the financial statements, the signature of the company controller, or a paragraph about the audit conducted in accordance with OCBOA, do not carry the same critical requirement as the independent title. While those may be relevant or included in the report depending on circumstances, they are not mandated as a specific inclusion like the title.